Stock assessment model with skimmed milk powder

Disclaimer:
Note that not necessarily purchase, own or participate in any securities or other financial instruments referred to in this article. Assumes no responsibility for any action arising from actions taken by anyone who reads this article. You are responsible for their own finances - nobody else. Yown do due diligence, when research on financial matters.

The SMP (Stock Market Plus) Model stock assessment is based on the idea that, inany market, on average, an investor will win the market by buying undervalued securities at market prices. The model proposes the construction of a diversified portfolio of securities (in theory) to overcome their present value, even sad in a bear market for a period of 10 years. The model of powdered skimmed milk powder is extremely sensitive. Measures are needed NTA (net tangible assets), growth factors expected, the flavors and results with a small market pessimism for good measure. The model isquite simple, but requires research that can not get your average class.

How do I know that the MMP work? In early 2004, tired of my losses arising from the attempt to play the market short-term ups and downs, I had an idea of long-term investment. I thought that the intrinsic value of a diploma was their current NTA per share in addition to its expected earnings per share (EPS) growth, year after year, tempered by the realistic possibility thathave a wider market. Stocks that could move ahead of their current prices over time, even in a bad market, were those who wanted to consider. I shot the projections over ten years, because I provided a realistic long-term timeline to see the people concerned. This idea about the valuation of stocks is probably not unique, and not intended to be the first person to think of anyone in this sense. What I like is that the model is removedconjecture. Connect number, and let the projection speak for themselves.

What kind of return has the revenue model? In February 2004, I began tracking a portfolio of 10 shares selected from MMP. In April 2005, the portfolio has increased by over 17% in just over a year. Now, if you are looking for a profit of 200%, try to go to Las Vegas or the racetrack. Diversification realistic, long-term gains are slow and steady, and require activeself-preservation. By comparison, stock markets have been fairly balanced (zero-profit) at the moment, el S & P beat the Dow Jones and Nasdaq.

What kind of action is the model? Well, I'll share something that I do not ... Wal-Mart, Microsoft, Gateway, EBAY, Oracle ... some real heavy weights. Now, the model predicts that the PSM is worth more than their current price in ten years ... Providian, Washington Mutual, LJ International, Ford, General Motors. I'll givea list later. But now I want to give the formula for the MMP so you can build a significant portfolio of today ...

First, some definitions:

NTA = Net Tangible Assets = (Total Assets - Intangible Assets - Liabilities)

EPS = Earnings per share = Net income / shares outstanding

EPS (0) = EPS (current year) = Expected EPS (current year) * Discount rate (I use 12)

GRW = expected growth rate of EPS (use of 5 years or 10 years if available)

Now, here's the formula ...

SMP (value) = current NTA / EPS shares + (0) + [EPS (0) * (1 + GRW * Discount (.12 ))](= EPS (1)) + [EPS (1) * (1 + GRW * Discount (.12 ))](= EPS (2)) + [EPS (3) + EPS (4) + ... EPS + (10)

OK, the formula is a bit 'uncomfortable, but if you connect to a spreadsheet, which works pretty well. So you know you're on target with math, here is a sample calculation (WM) Washington Mutual (these figures are slightly different in May> Current):

NTA = 13,951 (in billions)
Stocks = 873
NTA / Share = 13.951/.873 = 15.98 (which means WM NTA has a current $ 15.98)
EPS = 3.70
GRW =, 10
Discount Rate = .12 (with a high rate is based on the possibility of a bear market / inflation)

EPS (0) = 3.70 * (1-.12) = 3.26

EPS (1) = 3.26 * (1 + 10-12) = 3.19

BPA (2) = 3.19 * (1 + 10-12) = 3.13

...

EPS (10) = BA (9) + (1 +, 10 -, 12) =2.71

NTA / Share + EPS (0 ... 10) = $ 45.76

Thus, we model a value of SMP of $ 45.76 for WM, with the price of about $ 39. Thus, WM stand the test of milk powder, and I would recommend this stock as part of a diversified portfolio.

As a side note, I'm not looking for any type of contribution or fee for that knowledge. I hope this gives you advantages, as I think.

Investment prosperous for you!

http://www.stockmarketplus.net

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